Business Objects and Crystal Decisions today announced a definitive agreement under which Business Objects will acquire privately-held Crystal Decisions, the fastest-growing vendor in the business intelligence (BI) market, and the leading provider of enterprise reporting software.
Under the terms of the agreement, Business Objects will issue approximately 26.5 million shares of common stock in respect of outstanding Crystal Decisions common shares and stock options, which will represent approximately 29% of the combined company`s shares. In addition, Crystal Decisions stockholders will receive an aggregate of $300 million in cash. Based on the closing price of Business Objects` stock on 17 July 2003 the transaction is valued at an aggregate purchase price of approximately $820 million.
This transaction joins two of the strongest-performing companies in enterprise software, with highly complementary products, distribution channels and talent pools.
The transaction is expected to be accretive to Business Objects` 2004 earnings even prior to considering the impact of expected revenue and cost synergies, but before purchase accounting adjustments. The companies expect to capitalise on significant growth opportunities resulting from complementary products, channels and geographic presence. The companies also believe there are significant opportunities for operating cost synergies, which are expected to result in pre-tax savings of approximately $25 million for calendar year 2004.
"With this combination, we will seize the opportunity to take a leadership position in the BI market," said Bernard Liautaud, chairman and CEO of Business Objects. "The two companies are not only successful leaders in their space but have extremely complementary businesses, across many dimensions: Product capabilities, distribution channels, international coverage and skill set. Together, we will become the clear choice for organisations looking to standardise on a single BI provider."
Crystal Decisions, the fastest growing company in business intelligence
Crystal Decisions leads the enterprise reporting segment of the BI market. The company is the fastest-growing vendor in the BI market, having achieved 30% annual growth in 2002. For the 12 months ended March 2003, Crystal Decisions` revenue was $270 million, with an operating margin of 14%.
Crystal Reports, the company`s flagship product, has shipped over 14 million licences and is the most widely used report authoring tool in the market. Crystal Decisions has one of the strongest partner programs in the BI industry with over 350 OEM relationships, including Hyperion, Microsoft, PeopleSoft and SAP.
Strategic rationale
The combined company will give Business Objects:
* Business intelligence market leadership;
* The strongest, most complete product line;
* A powerful range of distribution channels; and
* Significant new growth opportunities.
The strongest and most complete product line
By combining the two companies` product lines, Business Objects will be able to meet the needs of all BI users and provide a strong product offering in all BI market categories. The combined product offering will be the strongest and most comprehensive available in the industry today.
Business Objects has long served the "power users" in organisations through its strong ad hoc query, reporting, and analysis capabilities. Business Objects has recently targeted executives with its new dashboard, scorecard and enterprise performance management (EPM) capabilities, launched earlier this year. Crystal Decisions is the solution of choice for a very large population of report consumers throughout organisations. Together, the two companies will offer a broad product line that meets the needs of all types of enterprises and all types of users.
Significant growth opportunities
Business Objects sees several immediate opportunities for growth:
* Product cross-sell. Cross-selling products between the respective companies` customer bases.
* Geographic penetration. Leveraging respective geographic strengths, in particular, Business Objects` well established presence in Europe, where enterprise reporting is under-penetrated.
The transaction is expected to close in the fourth calendar quarter of 2003, and is expected to be tax-free to shareholders of both companies with respect to the stock consideration the shareholders receive. The transaction is subject to regulatory reviews and approvals.
Share
Business Objects (NASDAQ: BOBJ ) is the world`s leading provider of enterprise business intelligence (BI) solutions. Business Objects enables organisations to track, understand and manage enterprise performance. The company`s solutions leverage the information that is stored in an array of corporate databases, enterprise resource planning (ERP) and customer relationship management (CRM) systems.
Business Objects, which established its presence through distributors in SA in 1994 and established a local office in 2000, owns approximately 11% of the local business intelligence market. Business Objects has approximately 18 000 customers worldwide, with more than 150 customers in the southern African region. Customers include De Beers, Unilever, Kumba, CellC, Santam, Liberty Properties, Medscheme and MTN.